CongressLine – Is the Good Samaritan Too Late for Y2K

The Fix

O n July 14 of this year, President Clinton and Vice President Gore spoke on the Year 2000 conversion issue at the National Academy of Sciences. The speech was to raise the level of consciousness concerning the Year 2000 and to educate the public and private sectors as to the steps being taken by our government to confront the issue (such as the goal of government-wide Year 2000 compliance by March 1999!). At this time, the President announced that the administration was drafting legislation to encourage industry to disclose their Y2K knowledge. The proposal, dubbed the “Good Samaritan” law, would immunize from liability businesses who exchange Y2K information in good faith, even if the information turns out to be inaccurate. John Koskinen, Chair of the President’s Council on Year 2000 Conversion presented a press briefing after the President.

A fact sheet released on July 14, 1998 on the Year 2000 Computer Problem and the Good Samaritan bill can be located through the Web site of the President’s Council on Year 2000.

The Response

O n July 30 of this year, Sen. Bennett (R-UT), chairman of the Senate Special Committee on the Year 2000 Technology Problem, and Sen. Dodd (D-CT), officially introduced the President’s bill, S. 2392, “The Year 2000 Information Disclosure Act.” The legislation would protect from liability statements made in good faith in the time frame between July 14, 1998 and July 14, 2001. The bill does not shield companies from lawsuits arising from Y2K- related computer or system failures. The House companion bill, H.R. 4355, was introduced by Rep. Burton (R-IN) on the same day as the Senate bill.

Reviews have been mixed. Although the Vice President warned against making the Y2K problem into a “political football” (a now oft quoted remark), some Republicans, such as Rep. Dreier (R-CA), have characterized the administration response as too little, too late. Rep. Dreier introduced his own bill, “The Y2K Liability and Antitrust Reform Act” (H.R. 4240) on July 16, 1998, which he touts as “comprehensive Y2K liability reform legislation.” (For the text of Dreier’s announcement on H.R. 4240, please go to: http://www.house.gov/dreier/y2k_bill.htm. This site will also provide links to a summary, floor statements and a press release.

The Dreier bill mandates computer hardware and software companies provide their customers with Y2K solutions in order to limit their liability for their customers’ potential losses and to inform their customers of a products potential to be Y2K incompatible. If the product was first made available to the public in 1995 or later, the system upgrade is to be provided free of charge. Liability can also be limited if a company makes reasonable efforts to test and protect their products against default and notifies the President’s Council on the Year 2000 Conversion of the steps taken towards compliance.

The bill also provides for a limited “information sharing” antitrust exemption which would extend from the date of enactment to the end of 2001. Rep. Dreier also introduced a focused Y2K disclosure bill (H.R. 4455) entitled, “The Year 2000 Readiness Disclosure Act” on August 6, 1998. He used the opportunity to chide the White House for introducing a bill that is “so narrowly crafted that it really won’t make any difference.” (For Rep. Dreier’s statement of introduction, please go to: http://www.house.gov/dreier/cdd080698.htm. The text of his press release on the bill can be found at: http://www.house.gov/dreier/y2k_rda.htm.

H.R. 4455 provides for private sector Year 2000 disclosures, which if accurate, cannot be used for purposes of Y2K civil litigation. The bill covers statements made between January 1, 1998 through the end of the year 2001. Back on the Senate side, Sen. Ashcroft (R-MO), introduced the “Year 2000 Enhanced Cooperation Act”, on July 30, 1998. S. 2384, clearly provides an antitrust exemption for the exchange of Y2K information. Each of the above bills has been referred to the House or Senate committees on the Judiciary and are awaiting further action.

Antitrust Issues

T he Antitrust Division of the U.S. Department of Justice has indicated that they will consider antitrust disclosure exemptions from liability on a case-by-case basis. An example of one such case is their approval of a proposed Y2K information exchange between members of the Securities Industry Association. (For the letter from Joel Klein, Assistant Attorney General, to the Securities Industry Association, please go to: http://www.usdoj.gov/atr/public/busreview/1824.htm. The DOJ press release on the approval is located at: http://www.usdoj.gov/atr/public/press_releases/1998/1823.htm.) The Securities Industry Association Web site is: http://www.sia.com/. The SIA maintains a comprehensive Year 2000 information page which includes Web links, vendor information and links to the SIA Year 2000 Steering Committee reports and activities.

The States

T he states have taken the bull by the horns and have begun to enact laws to limit their Y2K liability. An informal survey indicates that Virginia, New Hampshire, Hawaii and Georgia have all passed legislation which gives them immunity from claims arising from Y2K computer failures and errors. (For an example of a state immunity bill, please go to: http://leg1.state.va.us/cgi-bin/legp504?981+ful+CHAP0820 for Virginia House Bill 277 as passed and signed by the Governor as Chap 820.) Other states which have considered similar legislation include Washington, Indiana and Illinois and one bill (S.B. 2000) is currently pending before the California State Senate.

Fall Promise

T he private sector has received the President’s proposal with a fair amount of enthusiasm, but there is a well grounded concern that Congress will not act quickly enough to enact legislation this session. Congress is in recess for the month of August and the legislative agenda upon their return in the fall is still to be determined. Until there is some movement on this issue from the Hill, the private sector will be keeping their own counsel as they scramble to minimize their potential Y2K liabilities.

Sabrina is also Researcher/Author of
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